The Boston Consulting Group published the ICANN-sponsored report 'Connecting the World: Greasing the Wheels of the Internet Economy'. The study ranked the world's sixty-five largest nations on the basis of the strength of their digital economies. Particular attention was paid to 'e-friction': factors that inhibit development of the digital economy around the world. The outcome is an interesting publication that deserves attention in the Netherlands and elsewhere.
Report distinguishes four types of e-friction
In the report, each country is assessed and ranked on the basis of four types of e-friction. The lower the score, the less resistance there is to digital economic development.
The four types are:
Infrastructure-related friction:
is there good internet access? Does the internet work properly in the country? This factor carries the most weight in a nation's final ranking. And rightly so. The report cites examples of countries where web developers build their websites offline and then upload them at a local internet café.
Industry-related friction:
are there sufficient trained personnel in the country? Are local legislation and regulations adapted to online commerce? On this point, the European Union receives a ticking off: regulation of online activities is extremely fragmented within the EU, resulting in an unnecessarily low score for member states.
Individual friction:
are consumers in the country e-skilled? Do they have access to online payment tools (e.g. iDEAL)? Do they have sufficient confidence in the available tools?
Information-related friction:
is there sufficient content in the local language? Are there enough websites aimed at the home market? Do people trust their government and do they dare to publish content online?
Less friction means a stronger digital economy
The researchers awarded each of the sixty-five studied countries a score based on the four criteria described above. They then established the correlation between the various forms of e-friction and the size of the digital economy. The size of each country's digital economy was expressed as a percentage of its Gross National Product (GNP). The unsurprising conclusion: less friction means a stronger digital economy.
Netherlands scores well
The Netherlands is ranked ninth of the sixty-five countries. Switzerland and the Scandinavian countries occupy the top positions. The researchers made reference to a number of the Netherlands's strengths – chief amongst them the strength of our digital enterprise climate and the internet-literacy of the population. The Netherlands did less well on the fourth criterion, standing just sixteenth in the 'Information' ranking. That is striking, because the ranking criteria included the penetration of the national ccTLD, which is higher in the Netherlands than anywhere else in the world. Unfortunately, the researchers did not explain their finding.
Result is subjective
The study is an indirect plea for net neutrality and an open internet. Policy-makers need to be careful about regulating the digital economy and to invest in education and the digital infrastructure. As with previous studies of a similar size, questions can be raised about certain aspects of the research methods employed. For example, the researchers use their own definition of the digital economy and the minor e-friction differences amongst the top ten countries appear to make very little difference.
A closer look at the Netherlands?
Although the Netherlands is already performing well and generally on a par with the other top-ten countries, it would be interesting to analyse our performance in more detail. What are we really good at? Where do the opportunities for improvement lie? Because it looked at quite a large number of countries, the Boston Consulting Group study was just a little too superficial to provide answers to such questions. Will anyone else now take up the baton?
Download het rapport 'Connecting the World: Greasing the Wheels of the Internet Economy'.
